UNION CABINET APPROVES 4 GST BILL

UNION CABINET APPROVES 4 GST BILL

The Union Cabinet has cleared four bills related to the Goods and Services Tax (GST), ahead of their introduction in Parliament, to enable roll out of the tax reform from July 1. Approval of the bills by Parliament and a separate one by all state Assemblies will complete the legislative process for roll out of the GST, the one-nation-one-tax system that merges central taxes like excise duty and service tax and state levies like VAT.

What is GST bill?

 Goods and Services Tax bill is India’s biggest reform in India’s indirect tax structure.  The purpose of the bill is to introduce one single tax on supply of goods and services, from the manufacturing stage until its delivery to the final consumer.  The final consumer of the goods and/or services will only have to bear the GST charged by the final dealer in the supply chain, and avail set-off benefits at all the previous stages.  This means interim tax stages such as excise duties and service tax and state levies like VAT will be absorbed under GST.

The GST levy may go up to 40 percent after the GST Council proposed raising the peak rate in the Bill to 20 percent, from the current 14 percent, to obviate the need for approaching Parliament for any change in rates in future. The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year for the moment, In addition, a cess will be levied on demerit goods like luxury cars, aerated drinks and tobacco products. The CGST Bill sets the tax regime for the levy of GST on intra-state supply of goods or services or both by the central government. IGST Bill deals levy of GST on inter-state supply of goods or services or both by the central government. Similarly, the UTGST Bill provides for levy of GST on intra-UT supply of goods and services in the Union Territories without legislature. The Compensation Bill provides for compensation to the states for loss of revenue due to GST for a period of five years.

All state assemblies will have to separately approve the state GST legislation before this one-nation one-tax regime can be rolled out.

What are the benefits of GST?

 The introduction of GST bill will help in simplifying administration as it removes multiple taxation systems at every stage of trade model and removes disturbances in production.  It also aims towards providing a uniform tax rate for all goods and services.  The manufacturers will be benefited by the tax regime as it will reduce the tax that levied on them.  A system of seamless tax-credits will lead to minimal cascading of taxes, thus reducing hidden costs during trade. Roadblocks for GST bill  The state GST bill has to be approved by every state government, before its introduction in Parliament for approval.  At the moment, the state GST bill has been sent to all the states by their respective state legislatures for the approval. For any queries and comments please contact me on: eshaag6@gmail.com or 7388140275 KEEP ON SMILING!!!!!!!!